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R P

R P Yadav  | Answer  |Ask -

HR, Workspace Expert - Answered on Feb 23, 2024

R P Yadav is the founder, chairman and managing director of Genius Consultants Limited, a 30-year-old human resources solutions company.
Over the years, he has been the recipient of numerous awards including the Lifetime Achievement Award from World HR Congress and HR Person Of The Year from Public Relations Council of India.
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Asked by Anonymous - Dec 13, 2023Hindi
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Career

Presently I work as Asst VP in formulation R&D and my CTC is 72 lakhs. I have a total of 21 years experience post Ph.D degree. How does my salary compare to pharma industry standards? Is it in line with the industry trend or higher than average or lower?

Ans: Determining whether your salary is in line with industry standards can be influenced by various factors, including your role, responsibilities, the company's size, location, and overall market conditions. However, your current salary of 72 lakhs as an Assistant Vice President in Formulation R&D with 21 years of experience post-Ph.D. seems competitive and well above average for the pharmaceutical industry.

To get a more accurate benchmark, you might consider:

Industry Reports: Explore industry reports and salary surveys specific to the pharmaceutical sector. Organizations like Aon, Mercer, or local industry associations may publish such reports.

Networking: Connect with professionals in similar roles through industry events, LinkedIn, or professional organizations. Discussing compensation trends can provide valuable insights.

Consulting with HR: Speak with your company's HR department to understand how your compensation aligns with the company's salary structure and industry standards.

Job Portals: Check job portals for similar positions in your region to see the salary ranges offered by other companies for comparable roles.

Geographical Considerations: Keep in mind that salaries can vary significantly based on geographical locations. A salary that is competitive in one region may be considered high or low in another.

Market Demand: Assess the demand for professionals in your role. If there is a high demand for individuals with your skill set and experience, it could contribute to a higher salary.

Ultimately, while salary is an important factor, it's also crucial to consider other aspects of your compensation package, such as benefits, bonuses, and opportunities for career growth. If you feel satisfied with your overall package, including non-monetary benefits, and your compensation aligns with your responsibilities and the industry standards, then it's likely that your salary is competitive. If you have specific concerns, discussing them with your HR department or seeking advice from industry professionals can provide more tailored insights.
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I AM THINKING OF TAKING A LOAN OF 5,00,000 AGAINST MY CURRENT MUTUAL FUND MOTILAL OSWAL SMALL CAP FUND AND REINVEST IT IN SAME FUND FOR NEXT 3 YEARS. I DON'T WANT LIQUIDITY FOR NEXT 3-4 YEARS. SEEING THE MARKET IS LOW RIGHT NOW CAN I EXPECT A REURN? SHOULD I CONSIDER THIS OPTION?
Ans: Taking a loan against your mutual funds and reinvesting in the same fund may seem like an opportunity to maximise gains. However, this strategy carries significant risks.

Key Risks to Consider
1. Market Uncertainty
Small-cap funds are highly volatile.
A temporary market correction doesn’t guarantee strong returns in the next 3 years.
If the fund underperforms, you could face both a loan repayment burden and lower returns.
2. Interest Cost vs. Expected Returns
Loan interest rates on mutual fund pledges typically range from 9-12% per annum.
Your small-cap fund must generate higher returns than the loan rate to make this strategy profitable.
If the fund returns below 12% CAGR, your effective gains will be negligible or negative.
3. Forced Liquidation Risk
If the market corrects further, your lender may sell your pledged mutual fund units to recover the loan.
This could happen at a loss, forcing you to exit at a lower NAV.
4. Overexposure to a Single Fund
Investing additional money into the same small-cap fund increases concentration risk.
Instead, diversification across flexi-cap, mid-cap, and small-cap funds is better.
Alternative Approaches
Instead of taking a loan, consider:

SIP Investment Strategy

Continue SIPs in a staggered manner rather than a lump-sum reinvestment.
This reduces the risk of investing at an unfavourable price.
Diversified Portfolio Allocation

If markets recover, large-caps and flexi-caps may rebound earlier than small-caps.
Diversifying into these categories will balance returns and risk.
Rebalancing Your Current Portfolio

If you have underperforming funds, consider shifting money to stronger funds.
This avoids borrowing costs and interest rate risks.
Final Insights
Taking a loan against your mutual fund for reinvestment is not advisable due to the high risk of market downturns, interest costs, and forced liquidation. Instead, a disciplined SIP approach in diversified funds will offer better risk-adjusted returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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